In the winter of 2001, China was formally inducted into the World Trade Organization, the international body charged with promoting free trade and enterprise throughout the globalized world. After 15 years of grueling negotiations, the terms of the admission were finally accepted by China and the world at large. This process has arguably been the single most important factor that has led China to become the economic powerhouse that it is today.
The China of 2012 would have been virtually unrecognizable in 2001. Before being admitted into the WTO, China’s trade was one-fifth the level that it is now. China is now the world’s second largest economy and the biggest exporter in the world. According to Zhang Hanlin, head of The WTO Studies Institute in Beijing, “Seventy percent of China’s economic achievements this decade can be attributed to our membership in the WTO.” Examining just how China’s entrance into the WTO transformed the country is critical in understanding the role of China in today’s global economy.
One of the key areas in which China has come to dominate is global production and trade. This phenomenon was outlined in a widely-read New York Times article that explored how in the past decade Apple has shifted its manufacturing nearly entirely from the US to China. There are a variety of reasons that Chinese manufacturing has flourished, but two of the biggest factors are attributed to the lowered tariffs imposed by other countries and the ease of international trade regulation, both a direct result of China’s membership in the WTO.
Now that China’s production has driven the country’s economic boom, incomes are rising, as are living standards. China is quickly becoming a developed nation. As these developments progress, China is beginning to shift its focus to moving beyond manufacturing. Extraordinary growth rates and unparalleled economic expansion have created a new class of Chinese brands that are seeking to dominate the global markets. China has long been a global factory, building the products that are designed in other countries. Times are starting to change. With the rise of homegrown companies such as Lenovo, Haier, and Sinopec, China is beginning to build brands that are successful in their own right in the global marketplace.
This transition period has created an interesting business atmosphere in some of China’s leading cities. Companies based in Beijing and Shanghai need to cultivate an international outlook so as to understand how firms can succeed in countries as diverse as the US, India, and Brazil. Because of this recognition of the importance of global understanding, Chinese firms are courting the foreigners that are flocking to China in search of internships, language courses and work experience. The opportunities for business-minded foreigners are immense and only continuing to grow as China seeks to expand its reach internationally. With the help of young and enthusiastic students and professionals from around the world, Chinese firms are maturing at an unprecedented level. This dynamic is not only working to foster the international expansion of Chinese brands, but also creating a new breed of young, internationally-experienced businesspeople. With the ever-increasing globalization of the world economy, thanks largely to organizations such as the WTO, these young entrepreneurs are better primed to succeed than ever before.